The Reality We Face

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4 Aug 2011 11:24 AM
The Reality We Face

Andrew Sullivan

Politico has a classic piece today on the grim background for the president's re-election campaign next year. I think it overdoes things a bit - I guess they had to sell the piece somehow - but its content tells us something important, even if it's something we already know.

America has hit a wall. Its long term growth trend faltered at the end of the last century and has flatlined and then collapsed in this one, as Nate Silver grimly reminds us (also today). It is not as bad as the Great Depression (that's the only good news), but it is the next worst thing. You can attribute it to several things: the surreal debt-financing begun under Reagan and turned into "deficits-don't-matter" dogma under GWB; globalization which increased competitive pressure on the middle-class American worker more drastically than any other event in the nation's recent history; the resources gobbled up by a welfare state bequeathed when Americans saw it as their birth-right to get richer and richer and richer for ever; or something we don't quite yet understand.

But the upshot is that the music stopped on Bush's watch, like a needle scratching across a vinyl record, and the continued silence is deafening. It's foolish, I think, to believe that the stimulus hurt; it helped short-term and may well have prevented a second round of the 1930s. Ditto the astonishing turn-around of America's automobile industry (see today's GM news); and extension of unemployment benefits way past their due date. But none of this works up against the powerful forces now arrayed against higher growth or middle class revival.

For me, the scariest thing is that company profits are booming, and yet we still are trapped in this decline. The reason? Not just globalization, but our attempts to disguise the new challenges by bubbles: tech and real estate. These tonics gave us a temporary sense of still gaining wealth, but only intensified the crash when their snake-oil ran out. This seems to me to be the real issue here. It's deeper than Bush or Obama. The weak recoveries that follow financial crashes have made matters worse. The delusion that the US is still rich enough to police the whole world doesn't help either. And there's no reason this will end any time soon, except by a grim and difficult paying down of collective and individual debt, in the context of a depressed global economy (with China's growth still highly unstable).

Sorry, but elixirs won't change this. We have no money for them. There are things we can do - agree on long-term debt-reduction, reform taxes, cut the defense budget, hope education can help middle and lower middle class Americans compete better on a global stage. But until we get used to this new period of austerity, and accept it, we will bang our heads against walls.

I confidently predict that Americans have so little experience of stasis or relative decline, let alone long-term hardship, that they will continue to take out their woes on various presidents required to govern at a time like this. My fear is that this despond and despair will be exploited by crazies on the populist right, as they have been in history. But culture war won't create jobs. Even a civilizational war, as some on the far right are itching for, won't help. We are not in the era when mass mobilization can be achieved in war or peace.

The best outcome, I suspect, will be a return to American realism, a determination to do the things we can while avoiding the things that will only give us a temporary hit. In this, the president's best hope is continued honesty with the American people, calm, and resilience. In hard times, radicalism appeals. But so too does small-c conservatism. In dark economic times, people sometimes keep a hold of nurse for fear of finding something worse. But all this requires a stoicism at odds with American character and history.

I guess I'm saying that the long great ride seems to be over. The question is simply whether Americans can or will handle it without losing their heads.

The New Class War: Wealthy paying 25% less in taxes since 1990s
byHunter
Reposted from Daily Kos Labor by Laura Clawson
CAP has a graph showing how tough wealthy Americans have it these days:

(Center for American Progress)
America’s millionaires won’t be asked to contribute a single dime [towards deficit reduction]. That’s unfortunate because they certainly can afford it. Not only have their incomes been skyrocketing but data released this week by the Internal Revenue Service reveal that their tax rates have plunged over the last two decades. As a percentage of their incomes, millionaires are now paying about one-quarter less of their income to federal taxes than they did in the mid-1990s.
So what’s causing the tax bills of the wealthiest to drop? The average millionaire will pay $136,000 less this year because the Bush tax cuts are still in effect, according to the nonpartisan Tax Policy Center. The Bush tax cuts of 2001 and 2003 lowered the top marginal rate from the Clinton-era 39.6 percent to 35 percent. They also dropped the rates on capital gains and dividend income to a historically low 15 percent. (Capital gains rates had already been cut from 28 percent to 20 percent in 1997.) [...]

And it was a super-boon to mega-millionaires and billionaires. IRS data show that the tax rates of the richest 400 Americans declined from 29.9 percent in 1995 to 18.1 percent in 2008, largely because that exclusive group derives two-thirds of its income from capital gains.

Why, oh why, have our deficits been ballooning? Perhaps we should ask a bunch of Bush-era hacks about that, and what they think we should be doing about it.

Oh, wait. That's exactly what we've been doing. And the answer always comes back "cut aid to poor people."

This is just a random thought, but it's sure been a long time since I heard the phrase "compassionate conservatism." Now it's all about hurting people so that the rich can collect even more of that cash.

The key to the nature of progressivism is the realization that the size and scope of government and the freedom of the individual do not stand in diametrical opposition, as conservatives and libertarians would have one believe. Instead, the progressive vision of government is simple: government is the entity most responsible for ensuring equality of opportunity. The children of the rich will always have a leg up on the children of the poor: they will often be sent to the best private schools. Their parents will be able to afford to send them to the best universities, regardless of a scholarship. When they graduate from college, they will have easier access to employment because of the connections that so often come hand-in-hand with money and prestige. The government can never mandate equality, but it can at least offer an opportunity for advancement. Our tax dollars fund public schools to ensure that everyone has a chance. Our tax dollars fund scholarships and grants to ever so slightly reduce the unfairness that makes one child unable to go to a good university while another with no better qualifications can go, owing to nothing but the fortunate circumstance of parentage. The same principle is at the core of a progressive mindset regarding the relationship between a government and its people. For instance, government can promote equality for women by creating regulations and laws that ensure equal pay for equal work, but it can do the same for the LGBT community by eliminating the regulations that discriminate against them. People should similarly be free to breathe clean air, and free to feel sure that their employers have taken adequate precaution to ensure that as employees, they will not get maimed at the workplace.